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US stocks notched gains at the open on Friday as rising crude oil prices boosted demand for energy stocks.
Wall Street’s benchmark S&P 500 advanced 0.4 per cent while the tech-focused Nasdaq Composite gained 0.6 per cent at the New York opening bell. Energy stocks led the way after Brent crude rose 0.5 per cent to $90.50 a barrel, close to its highest point since November. West Texas Intermediate, its US counterpart, rose 0.5 per cent to $87.34.
US indices have fallen this week as investors grew more concerned over the prospect of interest rates staying higher for longer after fresh data pointed to unexpected resilience in the US services sector and labour market.
Traders are poised for the closely watched US inflation report due next week, in the hope of gaining more insight into the Federal Reserve’s policy plans more than a year after the central bank began to lift rates.
The overwhelming majority of investors are betting that the Fed will keep interest rates steady at the next meeting on September 20 but there is less consensus on whether more tightening is in store by the end of this year.
European stocks were muted as investors weighed the outlook for interest rates in the eurozone. Europe’s region-wide Stoxx Europe 600 was up 0.1 per cent, steadying after seven straight days of losses. France’s Cac 40 gained 0.4 per cent.
The region’s markets were buoyed by utilities stocks, up 0.5 per cent, which tend to be less sensitive to the economic cycle and so become more attractive when investors expect a downturn.
The majority of investors think that the European Central Bank will hold back from further tightening at its upcoming policy meeting next week, but some bet there are still more rate rises to come before the end of this year.
“We do not think the ECB will want to ‘shock’ the market, particularly against a backdrop of weakening economic data,” said Paul Hollingsworth, chief European economist at BNP Paribas.
The moves come amid a week of bleak economic data releases from China, which signalled a continued decline in exports and imports and a weakening services sector.
Asian markets declined on Friday, with falls in tech stocks dragging the benchmark CSI 300 0.5 per cent lower. Japan’s Topix fell 1 per cent while Hong Kong markets were shut due to storms and flooding. Shares in Apple supplier TSMC, the world’s biggest contract chipmaker, dropped 0.6 per cent.
Tech stocks declined sharply in the US and China this week following reports that Beijing had banned central government officials from using iPhones for work. The shares of industry giant Apple gained 1.2 per cent on Friday.
Meanwhile, oil prices advanced, resuming their upward trend from earlier this week when Saudi Arabia and Russia announced they would extend supply cuts until the end of year.
However, analysts do not “expect oil prices to drift too much upwards in the context of an overall slowdown in economic growth . . . and with the Chinese economy struggling to meet its growth targets”, according to Nadège Dufossé, global head of multi-asset at Candriam.
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